My early morning reads:

• Secular Bull and Bear Markets (Advisor Perspectives)
• Note to CEOs: Most mergers don’t pay (CNN Fortune)
• SEC Keeps Ratings Game Rigged (Pro Publica) see also Progress Is Seen in Advancing a Final Volcker Rule (DealBook)
Today’s WTF headline: Is Wall Street Meeting God’s Expectations? (WSJ)
• China Grapples With New Normal (The Diplomat)
• Why is an FT subscription so expensive? (Reuters)
Edward Luce: America is A Nation of Spoiled Brats (Foreign Policy)
• The Obsessive Habits Of Bruce Berkowitz, Morningstar’s Manager Of The Decade (Business Insider)
• Nooks, Books, and Schnooks (Slate)
• Can Occupy Wall Street Replace the Labor Movement? (Bloomberg)

What are you reading?

Treasury Doesn’t Sound a New Note

Source: WSJ

Category: Financial Press

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

21 Responses to “10 Thursday AM Reads”

  1. DSS10 says:

    Freddie Mac 30 year mortgage rate

    NMCMFUS:IND 3.82000

  2. Dividend Stocks says:

    Thanks for the link on Berkowitz, very inspirational.

  3. Moe says:

    “Is Wall Street Meeting God’s Expectations?”

    From Wall Street’s perspective, shouldn’t it read;

    “Is God Meeting Wall Streets Expectations?”

  4. schodack says:

    CNNMoney says: TIME TO BUY A HOUSE!!

    Classic bunch of nonsense.

  5. ilsm says:

    Diocletian would only have to purge ( more lions, a good idea) the christains to run the US.

    America is A Nation of Spoiled Brats:

    US is numero uno in war profiteering with all kinds of priceless, failed testing, and impossible to account for shiny weapons. Spending half the world’s total!! To “protect” from THE terrists a declining but concentrating national wealth.

    Then borrow, borrow, borrow for the upwardly mobile 1% accumulating.

    The 1% into militarism, war profits and safe investments in T Bills rather than paying taxes all this instead of productivity.

    A state religion, already worshipping the 1%; greed, property over humanity.

  6. DrSandman says:

    BR – I was wondering when you would get back to Fairholme/ Berkowitz. I have a small (12% of my “play” money) position in FAIRX and was very interested in your very public dumping of the fund last year.

    Ultimately, I kept the position, and am sitting on pretty nice paper gains. Curious, did you sell at a loss for your clients? (i.e., did you let emotion get in the way of decisions and sell at the low — which you always caution us — your readers — about?) Fairholme is up 34% YTD, (vs 11% SP500) after a pretty spectacular loss last year.


    BR: No, you are not. Look at the chart, you are still buried in the position.

    We sold Fairholme in March (between $34-35), I wrote about it on April 4th, it was $34.74. It fell to as low as ~$23, and has since rallied to $31 — meaning its still a 12% loser.

    if you cannot look at a basic chart and/or do simple performance returns, perhaps you need to rethink managing your own affairs.

  7. DrSandman says:

    Fairholme 5/2/12 vs. 12/30/11 = 30.97/23.15 = 33.7%. :-)
    My cost basis begins in summer 2004 @ a value ~20. Quoth the FusionIQ guy, “I find it astonishing that you cannot do simple math…”
    Thanks for the link to your original post. Your search is hard to use on mobile.


    BR: The relevant date is April 4th, when I disclosed we sold FAIRX.
    The prices that matter:

    $34.74 (where it was that day)
    $22.87 (subsequent 2011 lows)
    $23.40 (subsequent 2012 lows)
    $30.97 (price as of most recent close)

    Had you sold it when we did, you would have avoided a 33% drawdown and a 12% current loss to that discussion. (and that’s before we discuss what we replaced it with!). I am at a loss to understand your earlier criticism.

  8. VennData says:

    What a $1,000 a Night Gets You

    So, the argument the GOP Media Machine uses to end student loans is that it just raises the price of education. Then don’t tax cuts for the rich just raise the price of things rich people buy? Or is this just another one of those GOP talking points that you must use situational logic?

    Tax cuts for the rich only raise the price of things rich people buy.

  9. …if you cannot look at a basic chart and/or do simple performance returns, perhaps you need to rethink managing your own affairs…

    One (has to/should) admire the basic Simplicity, and Truth (therein, b/c of such) of that Response..


    and, to Risk dilution, by addition, “Dude” may care to ‘brush up’ on other Basics..

  10. islm, to your Point..

    Unmasked: Meet The FBI’s Bridge Bomb Plot Snitch
    May 3rd, 2012

    Via: The Smoking Gun:

    The paid informant who helped orchestrate the FBI sting that resulted in the arrest of five anarchists for allegedly plotting to blow up an Ohio bridge is a convicted felon who was arrested on bad check and theft charges in the midst of his cooperation with federal investigators, The Smoking Gun has learned.

    Shaquille Azir, 39, was named in a pair of felony indictments filed in January in Cuyahoga County, according to court records. Azir, who TSG has identified as the informant in the federal bombing case, is accused in the indictments of passing bad checks on July 25, 2011 and December 22, 2011.

    Azir, pictured in the mug shot at right, “has been working as a source for the FBI since July 20, 2011,” according to the U.S. District Court complaint filed yesterday against the alleged bomb plotters. Wearing a body recorder, Azir captured the five self-styled anarchists plotting to use C-4 explosive to take down a Cleveland-area bridge.

    Azir arranged for the purchase of the C-4 from an undercover FBI agent. He also fronted the alleged conspirators money for the buy of the material, which had been rendered inert by federal investigators. If the bombing case goes to trial, defense lawyers will certainly portray the 6’ 5”, 350-pound Azir as the plot’s instigator, a snitch who pocketed the FBI’s money to help entrap the five defendants, who range in age from 20 to 35…

  11. VennData says:

    Einhorn must have some crazy bets on to talk this kind of craziness…

    “…In recent months, stocks and bonds have developed a strong negative correlation — what is bad for bonds, is good for stocks. The Fed does not understand investor psychology: If you want to get people to sell bonds and buy stocks, the best way to do that is to show them that bond prices can, and do, fall…”

    I think when interest rates rise, this make equities – and other assets – DROP in price, not go up.

    “…others who, like Marge, have seen the market get cut in half twice in the last dozen years, will resist. They don’t believe it is prudent to gamble their nest egg in the market…”

    The “gamble” has been a prudent investment during the Obama rally, and stocks sport below trend PEs.

    “…Those who have given up on earning more will have to save more and spend less. This is the antithesis of a wealth effect, and their reduced spending is a drag on the economy…”

    And savings is channeled to … wait for it… asset prices!

    “…Bernanke is unwilling to raise rates, even by a modest amount. He’s hoping that his zero-rate interest policy will encourage Lisa to buy that house and persuade Maggie to start expanding the business. He worries that a rate hike will discourage them from doing so. What he cannot seem to acknowledge is that it’s been three years of ZIRP, yet credit-worthy borrowers still are not looking for loans…”

    Uh… please note the earnings growth on the XLF since the Great Recession. Borrowers aren’t looking for loans? Nobody? Huh? ROFL, how about looking at the data?

    “…Interest rates are only one consideration when looking to invest. If it makes sense to build a factory in a 2% ten-year note environment, it probably still makes sense to build it with long rates at 4%…”

    Probably? Spoken like a true Hedge Fund manager. Listen, if you double the cost of capital projects on the margin will not get done. Period.

    “…Putting money back into the hands of savers would stimulate the economy…”

    Here he begins his descent into money fallacies. If someone ELSE is PAYING higher rates, they will NOT increase their spending. “Look Honey our adjustable mortgage doubled, let’s go out and spend!”

    “…The promise to keep rates low invites procrastination. Why should anyone make a marginal decision to borrow and spend or build today, knowing that low-cost financing will still be available through the end of 2014?”

    The article claims to be modelling the behavior of “real people.” in the real world, real people have the auto-purchase rate up to 15 million/yr.

    “…Announcing a small rate increase with the possibility of more to come could provide the incentive they need to buy or build rather than risk missing out…”

    True. That will happen. So you want to bring that forward. Then what about the future? Einhorn was the same guy arguing against special tax deals on houses, cars, etc. When rates rise, some behavior will change… taking behavior from the future… Result: net zero.

    “…The sort of deflation that puts pressure on wages is a clear negative, as it leads to a lower standard of living. On the other hand, lower prices caused by scientific progress and higher efficiency are unambiguously positive…”

    And the Fed’s policy is stopping smartphones, fracking and other tech how?

    “… From the 2010 Jackson Hole speech that kicked off the QE2 frenzy, spot oil went from $73 to $114 a barrel in eight months..”

    And when he cut rates in 2008 oil went down. So? What is the correlation between oil prices and Fed actions? the R-squared?

    “…There is nothing that slows the economy faster than rising oil prices…”

    I pick fiscal cuts and tax hikes. Wars do that, for the losers. How about cost-push inflation from labor?

    “…Money spent at the gas pump is not available to be spent at the Kwik-E-Mart on other items…”

    So the people who own, work for and supply Kwik-E-mart’s don’t spend or invest their money, right? It just vanishes, right? This is the height of money fallacies.

    This is a bunch of nonsense. Einhorn is wrong.

  12. James Cameron says:

    Not sure this is the most apt title, but . . .

    Krugman Wishes He Was Wrong Amid EU Austerity Backlash

  13. ottnott says:

    Re: “Note to CEOs: Most mergers don’t pay”

    Note to business journalists: asking CEOs to judge the payoff of a merger by evaluating the returns to ordinary shareholders suggests that you have been sleeping in a cave for the last 30+ years.

  14. SOP says:

    Harvard, MIT announce online learning project:

    Harvard and the Massachusetts Institute of Technology have joined forces to offer free online courses to anyone with an Internet connection.

    (H/t Seraph)

  15. Mike in Nola says:

    Interesting interview with Peter Bergen on Fresh Air about the hunt for Osama:

    His anwer to the question about whether Iraq distracted from the hunt was worthy of a good lawyer.

  16. Molesworth says:

    New GMO white paper.
    Caveat Emptor: Capital Rules and Deleveraging Can Make “Bargain” Banks Expensive
    Richard Mattione – Published 5/3/2012
    The markets remain too sanguine about the valuations of banks in the face of macroeconomic adjustment, deleveraging, and the various capital, leverage, and liquidity rules that will come from round three of the Bank for International Settlements (BIS). That should translate into returns on equity that are likely to be sharply reduced in the future. This white paper shows how valuation is affected for a variety of factors including capital structure and leverage, and then applies those scenarios to the banks of various nations in the developed world. That translates into price to equity ratios that range from the slightly cheap to the oft-mentioned “fully valued,” which itself usually substitutes for “too high,” even though price to book ratios appear to be at a substantial discount.

    Requires sign in

  17. thomas hudson says:


    i don’t see how using the informant makes them any less guilty. at the end of the day, one of them entered the text message to have the cell phone trigger the plastics. at no point, apparently, did the moral compass go off in their heads saying something like ‘we might kill someone if we do this’.

    i get it that the kids were pissed off about their lot in life, and that they felt frustrated that occupy cleveland was not going far enough and/or was losing steam. but can we argue that their actions were the next logical step to get their point across? my answer would be no.

  18. SOP says:

    T. Hudson,

    Whether or not the FBI is basically fishing for dimwits to set up on “terrorist” charges, and whether or not that is a good thing, are interesting questions.

    Another question = is our Government preparing for “problems” that appear to be Magnitudes larger than most average persons wuld thunk? And much sooner than most would thunk?

  19. yo ‘Hudson’,

    aside from “SOP”‘s Q:s..

    personally, I’m not sure “where you’re ‘coming from’”..

    I haven’t given ‘the Matter’,much, thought..

    really, (to borrow from Rod Sterling..), it seemed, to me, a “Sign Post”…..


    Fast and Furious: Grenades
    May 2nd, 2012

    Via: Daily Caller: In a shocking development in the Operation Fast and Furious investigation, documents show Bureau of Alcohol, Tobacco, Firearms and Explosives agents allowed grenade parts to walk in addition to guns. The emails also show Obama administration officials acknowledging that they may lose track of grenades but would still be able to accomplish [...]

    Terrorist Plots, Hatched by the F.B.I.
    April 30th, 2012

    Via: New York Times: THE United States has been narrowly saved from lethal terrorist plots in recent years — or so it has seemed. A would-be suicide bomber was intercepted on his way to the Capitol; a scheme to bomb synagogues and shoot Stinger missiles at military aircraft was developed by men in Newburgh, N.Y.; [...]

    Oh Sure: ‘This Internet Provider Pledges to Put Your Privacy First. Always.’
    April 12th, 2012

    Alternate headline: Supposedly Privacy Focused ISP Has Former NSA Technical Director on Advisory Board. Have a nice day. Via: Cnet: Step aside, AT&T and Verizon. A new privacy-protecting Internet service and telephone provider still in the planning stages could become the ACLU’s dream and the FBI’s worst nightmare. Nicholas Merrill is planning to revolutionize online [...]

    Drug Lords Targeted by Fast and Furious Were FBI Informants
    March 29th, 2012

    Via: Los Angeles Times: When the ATF made alleged gun trafficker Manuel Fabian Celis-Acosta its primary target in the ill-fated Fast and Furious investigation, it hoped he would lead the agency to two associates who were Mexican drug cartel members. The ATF even questioned and released him knowing that he was wanted by the Drug [...]

    FBI Memo: Agents Can ‘Bend or Suspend the Law’
    March 29th, 2012

    Via: Wired: The FBI once taught its agents that they can “bend or suspend the law” as they wiretap suspects. But the bureau says it didn’t really mean it, and has now removed the document from its counterterrorism training curriculum, calling it an “imprecise” instruction. Which is a good thing, national security attorneys say, because [...]

    maybe, ‘try a new Tune..’..

  20. DrSandman says:

    For the (blog) record, BR — selling FAIRX @ $34 was a good call. Bravo. I have learned lots about investor psychology here at this blog and credit the educational aspect for my not capitulating and selling at the bottom towards the end of 2011 like muppets are want to do.

    The educational (and sometimes contrary POV to my own) nature of the blog is why I keep coming back for punishment. Thanks.